Business update: Apple increases buyback, will split stock

Apple plans to buy back an additional $30 billion of its stock, raise its quarterly dividend by 8 percent and split its stock for the first time in nine years.

The Associated Press

CUPERTINO, Calif. — Apple plans to buy back an additional $30 billion of its stock, raise its quarterly dividend by 8 percent and split its stock for the first time in nine years.

The commitment announced Wednesday as part of Apple's fiscal second-quarter earnings report expands on the company's previous pledge to spend $60 billion on stock buybacks by the end of next year. The company is now earmarking $90 billion for buybacks during that time frame.

Apple Inc. also is raising its quarterly dividend to $3.29 per share as part its effort to funnel more money to stockholders.

The company also will execute an unusual seven-for-one stock split in early June. The move will dramatically decrease the nominal value of Apple's stock, which closed Wednesday at $524.75, though the total value of the company shouldn't change from the split.

Apple's stock soared by nearly 8 percent in extended trading after the news came out.

The slowdown in revenue growth has prompted investors to wonder whether the company has lost its innovative power since the death of Steve Jobs.

The results for the first three months of the year illustrated how Apple Inc. can afford to spend so much money on its own stock.

Apple's earnings rose 7 percent to $10.2 billion, or $11.62 per share, an amount that exceeds what most technology companies make in an entire year. Revenue climbed by 5 percent to $45.6 billion.

The Cupertino, Calif., company's quarterly revenue growth has been stuck between 1 percent and 6 percent for the past year.

Investors have been worried about the future of Apple since Jobs, its co-founder and chief visionary, died in October 2011. Those worries have been compounded by the fierce competition that Apple faces in the mobile device market, particularly from Samsung Electronics Co.

The company's stock price has been about 25 percent below its peak of $705.07 reached 19 months ago. The shares rose to $564.83 in Wednesday's extending trading, after closing earlier at $524.75.

The quarter was highlighted by a 17 percent increase in iPhone sales from the same time last year to 43.7 million units, boosted by strong demand in China, the U.S., Western Europe and Japan, according to Luca Maestri, who will become the company's chief financial officer later this year.

But iPad sales slipped fell 16 percent from last year to about 16.4 million tablets.